AAPL Options Strategy

  • Posted: 29 March 2012 11:33 PM #121

    610/615 weeklies?  I would be concerned although my weekly positions are normally small.  Let me provide an example…  Last week I was holding 595/600 spreads. I sold them shortly after open on Friday to lock in a 60% gain.  Had I held to the close I would have realized 100% gain but the risk / reward was not worth it for ME.  This week I sold my weekly spreads on Tuesday to lock in gains.  I rarely plan to hold spreads to OE unless they are so far DITM that the risk is extremely low AND I have enough cash as a hedge so I can by out and up if I get what I would consider to be a good entry.  One other thing I will mention when playing weeklies is that I, more often than not, buy the long leg so it is ITM and the short 3 strikes out.  If we see a dip at the first of the week I can buy bac the short and resell a lower strike to reduce CB.  Gregg Thurman employs a similar procedure ( in fact it may be the very same).  There are many here far better at playing weeklies than I am, I keep my “bets” small and keep a close eye on the action, broader markets and most of all I try to control my greed because I recognize I very much am greedy wink

         
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    Posted: 30 March 2012 12:47 AM #122

    ChubsteR - 29 March 2012 02:09 PM
    Nevyn - 29 March 2012 04:13 AM

    TFSA are great. Mine has grown from 15k to six figures with aapl options. My strategy is has been to play the earnings by buying itm quarterly options.

    That is fantastic Nevyn! Mine has actually lost money as I’ve been trying to stay conservative.

    Can you please further elaborate on your strategy? TIA

    I am a relatively, unsophisticated retail options trader with a relatively unsophisticated strategy.  So use at your own risk, which is considerable!

    My method worked well for the last 4 quarters.  This quarter could be different.  i.e it works until it doesn’t work.

    All I did was wait for a dip before earning and then bought deep in the money calls.  Deep in the money calls have a small premium and a high delta.  This means they mimic most of the ups (and downs) of AAPL stock.

    I set a target of 50%  - 100% and then sell when right before earnings or if I am feeling brave I hold onto them afterwards.

    This time around I am looking at buying a few May and Jul contracts, probably in the $560 - $575 range.  Tomorrow and early next maybe a good time to buy for this earning run up.

    This strategy can be nerve wracking.  And I have thought of changing to just buy Jan’13 options and then just sit on them.

    Decide for your self, what best fits your risk tolerance.

    Also, I have a few hundred common shares that I hold and do not trade.  The options money is my “play money”.

    (Edited typo)

         
  • Posted: 30 March 2012 12:49 AM #123

    Mav and jcaron, thanks for the feedback - lesson learned.

         
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    Posted: 30 March 2012 12:52 AM #124

    Well, who’s to say there’s a lesson _to_ learn?  No one knows what’ll happen in the market tomorrow.  Just watch out for whatever comes, prep in advance, whatever.

    And, oh no, horror of horrors, you might have a losing trade.  You may one day have a dumb trade.  Or more than one.  On the same day!  Join the club.  Of every single trader here with any significant amount of trades in the markets.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 30 March 2012 01:11 AM #125

    If you are going to play weeklies and want to survive long term, there are several things you really should keep in mind. I’m sure others can contribute theirs, but my list includes:

    1) Keep the amount at risk to a very small part of your account. 3% is a good number (5% max) This will allow you to take a hit every now and then and not get taken out.  You have to be able to return to play another day.

    2) Build in some protection to the position. This can be done several ways as mentioned; place your long call ITM and sell more than one strike up, 3 or 4 is preferable. This gives you some latitude to trade the short as the market fluctuates, buy it back, roll down and resell, rinse and repeat.

    3) Stay nimble! Never buy a weekly BCS and just sit and watch it and “hope” it to profit. Fridays rarely have big movements, so don’t bank on that to save a BCS. 

    4) If you see decent profit, take it!  You can always put the position on again later if the market give you another opportunity.

    5) Don’t trade weeklies when things are crazy or there are events, such as earnings. At least don’t play them the normal way.

    Overall a trigger finger is probably the best strategy to employ. The decay on weeklies is brutal!

    Good Luck!

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    Jan13 $600 or BUST! LEAP Spread Trial: Bought Jan13 590/600 BCS @1.45 on 9-21-2011
    Max Profit: 689%  Current Price:
    4.50 +210% as of 5-2-2012 - Woohoo! Finally Green!

         
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    Posted: 30 March 2012 01:25 AM #126

    Rudyo - 30 March 2012 04:11 AM

    If you are going to play weeklies and want to survive long term, there are several things you really should keep in mind. I’m sure others can contribute theirs, but my list includes:

    1) Keep the amount at risk to a very small part of your account. 3% is a good number (5% max) This will allow you to take a hit every now and then and not get taken out.  You have to be able to return to play another day.

    2) Build in some protection to the position. This can be done several ways as mentioned; place your long call ITM and sell more than one strike up, 3 or 4 is preferable. This gives you some latitude to trade the short as the market fluctuates, buy it back, roll down and resell, rinse and repeat.

    3) Stay nimble! Never buy a weekly BCS and just sit and watch it and “hope” it to profit. Fridays rarely have big movements, so don’t bank on that to save a BCS. 

    4) If you see decent profit, take it!  You can always put the position on again later if the market give you another opportunity.

    5) Don’t trade weeklies when things are crazy or there are events, such as earnings. At least don’t play them the normal way.

    Overall a trigger finger is probably the best strategy to employ. The decay on weeklies is brutal!

    Good Luck!

    Great advice, thanks smile

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    Fortes fortuna adiuvat.

         
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    Posted: 30 March 2012 01:48 AM #127

    I’m counting on theta for my penny option play tomorrow :D

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 30 March 2012 10:39 AM #128

    oncdoc - 30 March 2012 12:37 AM

    Hi,
    This is my first option reaching expiration.
    Please bear with my newbie questions. 

    I have 10 Mar30 BCS 605/610 bought for $2.2, and I didn’t close it out today when AAPL was above 610. My thinking was that we will probably hit 610 tomorrow and I can get a value closer to the $5 spread when I close it out tomorrow. In retrospect I think I made a mistake. 

    Should I have closed it out when the short leg is so close to the money?

    I also have a 10 Mar30 BCS 590/595 that I am planning to let expire tomorrow because I think both legs will be in the money at expiration.  Is that OK, or should I close it out?

    Hoping for close over 610 tomorrow.

    I think you should be ok, but I personally wouldn’t wait till the end of the day.  Depending on the movement today, I would bet Apple will bounce around the 610 number, both up and down.  On one of those ups, I would think you could close your spread (if you wanted) for about $4.  You could get out for $3 now which is still a nice % gain on $2.20. 

    One thing I try to tell myself is, the chances to get out or get your ‘target #’ diminish minute by minute today.  So for me personally, if the action is scary and it looks like 605 or less could be a close, id take what I can get on a nice pop instead of waiting till 4pm.  Any profit is still a profit.  Good luck!

         
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    Posted: 30 March 2012 10:43 AM #129

    Mav - 30 March 2012 04:48 AM

    I’m counting on theta for my penny option play tomorrow :D

    Hey mav i’m just curious how something like that works.  I can’t find the specifics but you were gonna try to get something for .02 at the end of the day?  Do you then hope for after-hours move of Apple or how does it work?

    TIA

         
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    Posted: 30 March 2012 10:52 AM #130

    I have started to play weekly BCS.  Just a small position every week.  Goal is to make $1K - $2K per week if opportunity exists.

    On Monday I bought Mar 30 590/600 BCS for $7.60 and sold it for $9.75 yesterday.
    ( I should have sold them Tuesday or Wed. But I was try to get $9.90 or $9.80 for them.  Next time I will take the quicker profit to eliminate any further risk)

    This morning I bought April weekly $590/$600 BCS for $7.45.  Goal is to sell for $9.50+
    ( I think I bought in too early.  I should have waited until Monday to see the trend, but I got the price I wanted)

         
  • Posted: 30 March 2012 11:07 AM #131

    terps530 - 30 March 2012 01:39 PM

    I think you should be ok, but I personally wouldn’t wait till the end of the day.  Depending on the movement today, I would bet Apple will bounce around the 610 number, both up and down.  On one of those ups, I would think you could close your spread (if you wanted) for about $4.  You could get out for $3 now which is still a nice % gain on $2.20. 

    One thing I try to tell myself is, the chances to get out or get your ‘target #’ diminish minute by minute today.  So for me personally, if the action is scary and it looks like 605 or less could be a close, id take what I can get on a nice pop instead of waiting till 4pm.  Any profit is still a profit.  Good luck!

    Closed out the 605/610 - filled at $3.20 at the open.
    Thanks for everyone’s help.

         
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    Posted: 30 March 2012 11:39 AM #132

    Wow, I’m glad that I closed out my 595/600s earlier this morning. I would’ve done it yesterday, but I totally forgot about them, as they were not in my main trading account.

    oncdoc: Good job on getting out of those 605/610s, those things are at 48 cents as I speak.

         
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    Posted: 30 March 2012 03:03 PM #133

    Nevyn - 30 March 2012 01:52 PM

    This morning I bought April weekly $590/$600 BCS for $7.45.  Goal is to sell for $9.50+
    ( I think I bought in too early.  I should have waited until Monday to see the trend, but I got the price I wanted)

    Ok, I chickened out. Keepin advice from Lovey, Mace and others in mind

    -near open bought 10 Apr 590/600 for 7.45
    -stock went down further
    -bought short leg back for $8.60 to split the bcs
    -sold short leg again at 10.60 to restablish spread
    - at 1.45pm, didn’t like the action and worried about next week
    - sold spread for 6.50

    So, I think I am ahead for day about $1k on this. 

    I’m home today and I was able to be nimble. If I was working it could have become ugly next week.

    Anyways, the point of the post is to show that I have learned from this forum and thank people for sharing their experience.

         
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    Posted: 30 March 2012 05:19 PM #134

    Well, that’s a little less I have to pay in taxes! LOL

    I was waiting for an AAPL “downwave”.  And we’re kind of in one now.  No problem!  Earliest expiry on the table is May 12.  I’ll wait it out for now.

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    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
  • Posted: 30 March 2012 05:35 PM #135

    nkmho - 30 March 2012 02:39 PM

    Wow, I’m glad that I closed out my 595/600s earlier this morning. I would’ve done it yesterday, but I totally forgot about them, as they were not in my main trading account.

    oncdoc: Good job on getting out of those 605/610s, those things are at 48 cents as I speak.

    for weeklies and very short term, set the close order at the same time as open ,with limit price you’re happy with. it will get sold on its own if the price is hit.
    This works for me.